Saturday, December 15, 2007

Wintertime reading list

In 2006, Kevin Phillips published American Theocracy: The Peril and Politics of Radical Religion, Oil and Borrowed Money in the 21st Century. Phillips got his start back in the Nixon era with a book titled The Emerging Republican Majority, but a lot of his more recent books have not been such good news for the conservative cause. The book American Dynasty savaged the Bush family going back three generations to Prescott Bush, who had questionable financial dealings with the Nazis. For all his animosity for the Bush family and his distrust of certain factions inside the Christian right, Phillips still identifies himself as a Republican and a conservative. In a 2004 interview, he said if he had his druthers, he would cast his vote for John McCain for president. I have not heard who he favors in the current race.

While I am not lining up to change my ideology, I do appreciate hearing the honest conservatives who deeply distrust the direction of this country and the Republican Party under the current misrule. I don’t agree with Phillips or Paul Craig Roberts or Bruce Fein on every point, but I agree wholeheartedly on the respect for the rule of law and real fiscal conservatism, which includes staying within your budget as well as a desire for lower taxes. Not everyone who calls themselves conservative is a crook like Tom DeLay or a bomb thrower like Ann Coulter or an obsessive hoarder of secrecy and power like Dick Cheney. We are going to need competing ideas to keep this country going, and an honest Republican Party will have to grow out of the mess that has been left behind by Bush and his cronies and sycophants.

Speaking of Left Behind, Phillips uses a lot of ink talking about the Christians who believe in one version or the other of the End Times is coming and right soon. If there is anything I don’t like about the book, it’s that I think the title is misleading. As you can see from the subtitle, the book deals with three separate topics and all just about equally. The world petroleum situation and the multiple American debt crises are also major thrusts of the book, and Phillips links these together with a concern that many of these end timers are either not paying attention to the troubling trends in oil and finance, or they welcome almost any bad news as a further sign that the ultimate Good News is coming soon, coming right after the destruction of the world as we know it.

I’ve lived rather simply for over ten years, so I’m not necessarily a good judge of when the economy is doing well, and distrust positive numbers that I don’t see reflected in situations I’m familiar with. The dot.com boom of the late 90s was something I could see reflected in the employment of friends and colleagues, and it helped the teaching profession as well. Likewise, I could see the pain caused by the dot.com bust. As for the allegedly vibrant economy of the Bush years, I’ve seen signs pointing both directions in my personal experience and the experience of my friends, and I had to wonder how much of it was based on the huge amount of debt the federal government had decided to get itself into, or the cooking of the books at companies like Enron.

The answer from Phillips is that business corruption is probably not the major problem, but the federal budget deficit is just the tip of a gigantic iceberg of debt this country is creating. The United States has a negative savings rate. It’s not just some folks spending beyond their means. The average person is spending beyond his or her means, even when we factor in the very rich who don't have to live beyond their means but may be involved in any of a number of schemes to bet on how debt is going finally get paid in messy financial plans called derivatives. Whether it’s credit card debt or treating their homes as cash cows, money that doesn’t actually exist yet is the engine of the current American “boom”. Even more frightening, Phillips posits that American overspending is the engine of the entire world economy. The Asian countries who give us credit are tying their strong currencies to our weak one, and other currencies not tied to the U.S. dollar so closely are outperforming the Chinese and Japanese. But in the bigger picture, it’s better for them to have a smaller slice of big and growing pie instead of having a bigger slice of a shrinking pie, which will happen if Americans ever are forced to live within their means.

The bizarre idea that Americans should be patriotic and spend instead of patriotic and thrifty makes terrifying sense given the facts of this book. If we start living within our means, that abrupt shift will be felt economically from Bangor to Bangalore to Beijing to Berlin to Brasilia. Keep rowing and don’t take a peek outside; you don’t want to see what’s chasing us.

The book is long on facts and short on predictions, which is the way I like it. Phillips compares the current American imperial objectives with failed empires of the past, like Spain, the Netherlands and Great Britain. While the book makes clear that getting into the kind of debt we are in is never a good sign, the British sunk into debt and then pulled themselves out a few times before the final fading in the 20th Century. The difference now is that we are not just the largest debtor nation right now, and still the biggest borrower. None of the numbers are going in the right direction.

While we are unlikely to have our international credit cards torn up by the Asian countries currently propping us up, the news on the oil front is much more precarious. Every barrel of crude oil in the world has to be bought with U.S. currency, and that makes the U.S. dollar the world’s reserve currency. Supporters of the war are big on demonizing Saddam, but the neocons who got us into this mess didn’t have any qualms about him when he was gassing his own people; that‘s what the famous meeting between Saddam and Rumsfeld was about, that we would continue to sell him poison gas after the attack on the Kurds.

(The handshake picture is famous. This lesser known picture smiling in tuxes at an evening meeting from the same era was found in a German magazine.)

They weren’t happy when he invaded Kuwait, obviously, but with the sanctions and no-fly zones in place after the first Gulf War, he was going to start any new wars. What he could have done that would hurt U.S. interests directly would have been to start taking other currencies instead of the dollar for his oil. This threat is still being put forward by countries like Venezuela, Iran and Russia, large petroleum producers that have serious differences not with America necessarily, but definitely with the current American administration.

American Theocracy paints a bleak picture, but I consider it required reading. As I said, Phillips doesn’t do much prediction, and when he does it is sometimes overly cautious. In a book written just last year, he posits that $100 a barrel oil might be coming as soon as 2010. Taking a look at the headlines, it could be here before New Year’s Day, with even better probability it will be here by Chinese New Year’s in early February.

2 comments:

I'd been wondering about this book, but my stack of to-read is so high that I put it off.

That pic of Rummy and Hussein looks almost photoshopped! What's with the jaundice, Saddam?

I did just finish Confessions of an Economic Hitman and Crossing the Rubicon: The Decline of the American Empire at the End of the Age of Oil. The first book was good, the second one was good up until about half-way, then it got too unfocused. Both are interesting, though.